ADB terms pensions costly, insurance weak

It also emphasised need to improve regulatory environment for insurance companies

ISLAMABAD':

The Asian Development Bank (ADB) has said that the Pakistan government employees' pension scheme is "attractive" but it places an immense burden on the national exchequer because it lacks a funding mechanism.

In a report released on Friday, the Manila-based institution also called for sweeping reforms in the country's underdeveloped insurance sector to bolster financial protection against natural disasters and support private sector growth.

The ADB detailed how the generous benefits offered to retired government employees are not backed by a structured funding plan, making the system a significant drain on public finances.

The report noted that "the burden of government pension on the exchequer is very high".

The report called for expanding the scope of the Employees' Old-Age Benefits Institution to create a more sustainable, contributory system, and emphasised the critical role that a robust insurance sector could play in Pakistan's economic stability.

The report suggested that the government should promote the insurance sector, particularly for social insurance programmes targeting the poor.

It also emphasised the need to improve the regulatory environment for insurance companies.